Switching investments

Article By: Jillian Kipling (acsis financial planning coach)

Share

If the investment underperforms you have the option of transferring to another fund within the investment house (I hope the above illustration clarifies this). If an investment company consistently underperforms (i.e. none of its available funds appeal to you) you do have the option of transferring your RA to another company via a section 14 transfer. You are not tied to a "dud" company for life. There are, of course, costs involved which need to be considered before making any hasty decisions.

To answer the last part of your question: What happens if your investment company goes belly up?

If the company itself folds, then nothing much will happen to your funds. They are held as a separate entity and will most likely just be transferred to another company to hold. If, however, the RA fund itself is mismanaged the funds are protected by indemnity insurance so that the investors do not lose any of their funds.

In the very, very unlikely case of both the company and the RA fund crumbling at the same time, then the investors will be paid out a portion of their investment in terms of the insolvency documentation. As always it is a good idea to diversify your investments to mitigate this risk. The old adage of not putting all your eggs in one basket in case disaster strikes still holds true.

acsis Limited is an authorised financial services provider. The response to the question covers some of the issues in a general and factual manner and does not constitute advice. It is important to consult with a financial planner who, after an analysis of the individuals? personal needs, goals and circumstances, will be able to provide comprehensive and appropriate advice.